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org © 2018 IJCRT | Volume 6, Issue 1 March 2018 | ISSN: 2320-2882

Impact of Rewards and Recognition on Employee

Motivation
Gangapuram Aruna, Assistant Professor, Dept. of MBA, Geethanjali College
of Engineering and Technology, Cheeryal Village, Keesara Mandal, Medchal
District., Hyderabad, Telangana, India.

ABSTRACT: The general objective of the research was to study the impact of rewards and recognition on
employee motivation. And the specific objectives were to identify the most effective means of rewards and
recognition, to study the behavioral differences between appreciated and non-appreciated employees, to
understand the extent to which motivation enhances employee’s performance, to identify if the motivation has
an effect on individual and organizational growth and to study if rewards and recognition results in emotional
conflicts between employees. The descriptive research design was adopted for this study. Various employees
from the companies were the respondents. It is evident from the study that a variety of factors influence
employee motivation and satisfaction. It was also significant to discover that there is a direct and positive
relationship between rewards and recognition and job satisfaction and motivation. Hence, if rewards and
recognition offered to employees were to be altered, then there would be a corresponding change in work
motivation and satisfaction. The direct translation of this could be that the better the rewards and recognition,
the higher the levels of motivation and satisfaction, and possibly, therefore, the greater the levels of
performance and productivity. In the event of major inconsistencies, especially for emotional conflicts between
performers and nonperformers, the organization should make an effort to re-assess and rectify this situation. In
the event that the organization does not re-assess this situation, it could have a resultant negative impact on job
performance and productivity as well as on the retention of minorities. In accordance with Maslow’s hierarchy
of needs, the lower level needs such as salary and benefits must first be met before the higher level needs, which
impacts motivation can be satisfied. The research study has shown that managers can employ different
strategies to motivate employees, but that it is important that managers keep in mind that different strategies
would have a different motivational impact on different people. To get optimum results from a motivational
strategy, the manager has to realize and understand issues, which requires recognition of each individual’s
unique values, beliefs, and practices.

Keywords: Rewards, Recognition, Employee, motivation

1. Introduction
As manpower constitute the core of any business and ultimately employees are the main focus of human
resource management, with the constant changes occurring in the world today, especially with regards to
technology and innovation, there is a need for companies to reassess the manner in which they communicate to
their employees, which would increase their morale and will act as a driving force towards an integrated
workforce. Thus, apart from financial compensations, there are other means to reward employees, some of
which include the praise that employees are able to acquire from their managers, the opportunity to take on
important projects or tasks, and even leadership attention which helps them climb Maslow’s pyramid of needs
to attain motivation for better performance.

Employee recognition is a judgment on a worker's contribution, in terms of the work process as well as
dedication and motivation. It also involves evaluating and acknowledging the results of this work. In short, it
looks at the unique contribution of each worker and stresses the value of his or her professional expertise and

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experience. By creating a culture of recognition, employees become more engaged. Engaged employees are
happy, loyal, and productive. Every day there is an opportunity to recognize someone for their service without
spending a lot of money. Informal rewards are the icing on the cake that keeps employees motivated, engaged,
and coming back for more. But it is also essential to study and understand the extent to which the above-
mentioned factors have an impact on the workforce considering all the positive and negative effects
appreciations have on individual and organizational growth. The primary need of the study is to introduce
innovative methods of appreciations for employees. The study would help companies frame newer employee
engagement programs. It would help researchers in future to analyze trends in employee engagement.

2. LITERATURE REVIEW
Masood Asim (2013) presented the impact of motivation level amongst the workers' performance with the
mediating of the training needed in Pakistan universities. The problem targeted at the research is the
relationship between rewards, promotion on the employee motivation with special effects from the worker’s
performance more specifically on education sector. The research was carried out from 118 respondents. In this
research correlation and regression methods were used to consider the data. The findings of the study explain
that the universities of Pakistan should improve the salary and reward system in order to get the desired
performance from the university employees.
Chukwuma. Edwin Maduka & Dr. Obiefuna Okafor (2014) presented that organization without motivating
its human resources cannot achieve its objectives and cannot run efficiently. The problem stated in research is to
learn the ways and effects of motivating the workers in an organization. The research was carried out from 400
staff of the manufacturing firms in Nnewi. The methodology used is being survey method. The findings of
research show that salaries paid to junior staff were very below hence poor motivated which leads to poor
performance. Junior staff prefers financial incentives than no financial. Management of the manufacturing firms
in Nnewi does not tend of their employee benefits, thus the study recommends that an increase in salary via
promotion and other benefits should be used as motivational factors.

1. Rewards and Recognitions’ Impact on Employee Motivation

The focus of this heading is to provide insights to the theories that have shaped the understanding of
motivation, by focusing on the content theories of motivation. The chapter proceeds with an in-depth
presentation of a total rewards management programmer and the support that a performance management
process can provide to such a programmer. Given the focus of this research study, it is important to have a
sound understanding of the meaning of rewards and recognition, as they are often used interchangeably, but the
literature indicates that there are unique, tangible differences between these concepts. Organizations are under
constant pressure to enhance and improve their performance and are realizing that an interdependent
relationship exists between organizational performance and employee performance. In the following chapter,
the focus will be on the motivational theories and the impact that these theories have on enhancing employee
performance. Increasingly, organizations are realizing that they have to establish an equitable balance between
the employee’s contribution to the organization and the organization’s contribution to the employee.
Establishing this balance is one of the main reasons to reward employees.

Organizations that follow a strategic approach to creating this balance focus on the three main components of a
reward system, which includes, compensation, benefits, and recognition. Studies that have been conducted on
the topic indicates that the most common problem in organizations today is that they miss the important
component of Reward, which is the low-cost, high-return ingredient to a well-balanced reward system. A key

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focus of recognition is to make employees feel appreciated and valued. Research has proven that employees
who get recognized tend to have higher self-esteem, more confidence, more willingness to take on new
challenges and more eagerness to be innovative. Reward system is an important tool that management can use
to channel employee motivation in desired ways. In other words, reward systems seek to attract people to join
the organization to keep them coming to work and motivate them to perform at high levels. The reward system
consists of all organization components – including people processes rules and decision-making activities
involved in the allocation of compensation and benefits to employees in exchange for their contribution to the
organization. In this chapter, we can find the basic conceptual understanding of rewards and recognition and
also the citations of various researchers on the same.

2. Important Distinctions
Recognition is highly akin to the concepts of consideration and reward. We must, therefore, draw a distinction
between these concepts in order to clearly identify what qualifies as recognition. To this end, we will use the
indifference/compensation continuum LEVELS
Indifference: A contractual tie between an individual and an organization.
Consideration: A social tie between a human being and an organization. Employees are perceived as thinking
and dignified human beings.
Recognition: A relationship between two or more people. Recognition is a return on an employee's effort and
dedication at work, as well as his or her results.
Reward: A formal, impartial, and equitable exchange. A material or financial expression of appreciation that is
conditional on results.
Compensation: The most formal expression of interest: a regular monetary reward.

3. Research Methodology
6.1 Research objectives:

The general objective of the research was to study the impact of rewards and recognition on employee
motivation. And the specific objectives were to identify the most effective means of rewards and recognition, to
study the behavioral differences between appreciated and non-appreciated employees, to understand the extent
to which motivation enhances employee’s performance, to identify if the motivation has an effect on individual
and organizational growth and to study if rewards and recognition results in emotional conflicts between
employees.

It is a scientific method which involves observing and describing the behavior of a subject without influencing
it in any way. Since there have been various researches conducted on rewards and recognition by various
researchers the descriptive design was adopted as the researcher intended only to project the scenario and
describe the phenomenon.

Research Design:
The descriptive research design was adopted for this study. It describes data and characteristics about the
phenomenon being studied.

Objective of Study:
 To examine the impact motivation and organizational performance
 To examine the major factors that increase motivation of employees.

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Research Questions

1. What is the major factor that increases motivation of employee?

2. What is the impact of motivation on organizational performance?
3. What is the connection between employee motivation and organizational performance?

Significance of Study:

The findings of the research will be beneficial to the organizations of oil and gas sector but also to the
other organizations as well in understanding the importance of employee motivation.

Universe
Various employees from the companies were the respondents.

Sample Size & Sample Design 50 employees were taken as the sample size by using ‘convenience sampling’
design was adopted as the respondents were selected by the researcher on the base of ease of access with which
he was comfortable.

Tools of Data Collection A questionnaire was prepared to collect data from the employees on the various
aspects of rewards and recognition desired by the researcher.

4. Source of Data Collection

Primary data: It comprises of the data which was collected through the questionnaires filled by the
respondents.
Secondary data: It comprises of the data which was collected through books, journals, articles, magazines, and
websites.

5. Pre Testing
The researcher gave a tentative questionnaire with a limited number of questions to 10 respondents and studied
the authenticity of the data collected to make further changes if required. It was done before the dates of data
collection and there were no changes done.

6. Tools Used
Tabular column, percentage method, Chi-square test, correlation etc.

7. Findings
The data collected by the researcher on ‘the study on the impact of rewards and recognition on employee
motivation’. The data were collected from employees of the study area. The data were analyzed after the
formulation of a codebook and a code sheet in a systematic representation. The followings were the findings

8. Methods of Reward Policies

 52% of the respondents’ organizations follow both formal and informal methods of reward policies.
 42% of the respondents’ organizations give employee of the month award.

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 26% of the respondents’ organizations carried out praising staff publicly at staff and other public
meetings as informal rewards and recognition.
 60% of the respondents’ organizations had rewards and recognition program on a monthly basis.

9. Mode of Recognizing Performers

 56% of rewards and recognition are based on a combination of innovative and creative ideas, increased
productivity and customer satisfaction.
 42% of the respondents’ companies use group vote, a decision from top officials and a decision from the
single manager as the mode of judgment for rewards and recognition
 38% of the respondents feel that promotion based on performance is the most effective way of
rewarding an employee.

10. Treatment of Non-Performers

 44% of the respondents said that training for skill development was given for non-performers.
 28% of the respondents said that non-performers who did not show improvement where terminated from
their respective jobs.

11. Various Impacts of Rewards and Recognitions

 46% of the respondents strongly agree that employee’s performance increases after rewards and
recognition.
 38% of the respondents were neutral on the fact that rewards and recognition instigate attitude or
overconfidence in the employee.
 42% of the respondents agree that non appreciated employees are isolated from appreciated employees.
 46% of the respondents agree that job satisfaction increases motivation.
 52% of the respondents strongly agree that rewards and recognition increase motivation.
 48% of the respondents agree that an employee puts extra effort in order to attain rewards and
recognition.
 38% of the respondents agree that rewards and recognition collide individual and organizational growth.
 36% of the respondents agree that rewards and recognition increase employee loyalty towards the
organization.
 36% of the respondents felt that the major benefit a company receives out of rewards and recognition is
increased level of motivation.
 48% of the respondents agree that rewarded employees show high-performance consistency.
 58% of the respondents felt that rewards and recognition should be given in front of the entire company.
 52% of the respondents felt that rewards and recognition should be given by their immediate manager or
supervisor.
 48% of the employees agree that rewards and recognition result in emotional conflicts between
performers and non-performers.

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1.1 Table showing relationship between after recognition and sense of achievement Case Processing
Summary

1.2 After recognition drastic improvement * motivated by sense of achievement Crosstabulation

1.3 Chi-Square Tests

Interpretation:
The above table shows that of chi-square calculated to find whether significant relationship between motivated
by the recognition you receive and you put extra effort in order to achieve a reward or recognition in their
company. As the p=0.141greater than the level of the signs so we accept the null hypothesis and .there is no
significant relationship between Recognition and the employee's extra effort to achieve the reward in the
organization.

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1.4 Table showing relationship between treatment of non-performers and motivation

Interpretation
The table shows that of chi-square calculated to find whether significant relationship between employee
motivation and the effort to achieve the rewards or recognition on their company. As the p=0.141greater than
the level of the signs so we accept the null hypothesis .there is no significant relationship between the
nonperforming employees and motivation.

Conclusion
It is evident from the study that a variety of factors influence employee motivation and satisfaction. It was also
significant to discover that there is a direct and positive relationship between rewards and recognition and job
satisfaction and motivation. Hence, if rewards and recognition offered to employees were to be altered, then
there would be a corresponding change in work motivation and satisfaction. The direct translation of this could
be that the better the rewards and recognition, the higher the levels of motivation and satisfaction, and possibly,
therefore, the greater the levels of performance and productivity. In the event of major inconsistencies,
especially for emotional conflicts between performers and nonperformers, the organization should make an
effort to re-assess and rectify this situation. In the event that the organization does not re-assess this situation, it
could have a resultant negative impact on job performance and productivity as well as on the retention of
minorities. In accordance with Maslow’s hierarchy of needs, the lower level needs such as salary and benefits
must first be met before the higher level needs, which impacts motivation can be satisfied.

The findings alluded to the fact that employees with no awards tended to be less motivated. Given the fact that
the organization and thus the business unit is in a state of transformation, employees in this category may want
to quit the organization. This places the business unit under pressure to retain these employees. The business
unit could benefit from implementing a retention strategy, which in itself has a strong focus on recognition. As
mentioned previously, reward and recognition if improved could have a positive effect on motivation and
satisfaction. The research indicates that recognition includes acknowledgment and performance feedback.
Managers in the business unit could thus use the performance management system to provide regular
acknowledgment and feedback.

The research study has shown that managers can employ different strategies to motivate employees, but that it is
important that managers keep in mind that different strategies would have a different motivational impact on
different people. To get optimum results from a motivational strategy, the manager has to realize and
understand issues, which requires recognition of each individual’s unique values, beliefs, and practices.
Important to consider is that different motivation strategies may affect an employee in different ways at

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different points in time because conditions, needs, and personal objectives are not static but in a constant state
of fluctuation.

Suggestions
 Many different things motivate people, and that which motivates one person may not necessarily
motivate another. Thus companies should take into account the interests of all the employees.
 Since most of the employees demand monetary benefit in rewards and recognition, organizations should
adopt more financial incentives for rewarding the employees.
 If the above-mentioned suggestion hinders the budget, innovative ways of low-cost recognition
programmers can be organized. Which can be,
 Post on ‘recognition board,’ bulletin board, newsletters, website.
 Hall of Fame – pictures of employees
 Submitting article to Intranet for agency viewing
 Submitting an article to local/regional/national newspaper regarding employee’s achievement.
 Scrapbook with pictures of achievements throughout the year
 Senior manager attending a staff meeting when employees are recognized for their achievements.
 All levels of managers should be trained on the art of making all the employees feel comfortable in the
working environment which does not result in emotional conflicts between performers and
nonperformers. It can be done by,
 Providing employees an understanding of how they can impact the organization's goals and drive
the business to success.
 Discussing the approach for managing and rewarding both individual and team performance.
 Explaining how the program works and how employees can receive recognition.
 Learning ways to motivate and inspire others.
 Learning how to communicate needs, expectations, and goals clearly.

Limitations:
The researcher was given a very limited time to conduct the study on the employees. The researcher also
faced difficulty in getting the respondents as many of them were not present in their workplace. The researcher
felt that getting the respondents was time-consuming. The cost involved to do the research was more. The shift
timings were another barrier to get the respondents. It may be a prerequisite to approach various organizations
which is ultimately a time-consuming factor. Respondents who have not received rewards or recognition may
show discomfort in filling the questionnaires.

References
[1] Allen, R. & Helms, M., (Fall 2002). Employee perceptions of relationships between strategy rewards
and organizational performance. Journal of Business Strategies, 19 (2). 115-139.
[2] Dunham, K., (December 16, 2003). Career Journal: companies offer spa days, gifts to reward, retain
employees. Wall Street Journal, (B8). Retrieved February 4, 2004, from http://80-proquest.umi.com.
[3] Jimenez, R., (October 1999). Managing employee retention through RECOGNITION. T+D, 53 (10). 53-
55.
[4] Karl Heslop(2005), The relationship between rewards, recognition, and motivation at an insurance
company in the Western Cape.

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[5] Keller, J. (1999). Motivational Systems. In H.D. Stolovitch& E. J. Keeps, (Eds.), Handbook of human
performance technology. (pp. 373-394). San Francisco: Jossey-Bass Pfeiffer.
[6] Lynch, L., (December 2003). Keeping the best: the difference between retaining and losing top staff
talent is leadership. Association Management, 55 (13). Retrieved January 16, 2004, from
http://nexis.com.
[7] Nelson, B., (January 2004). Everything you thought you knew about recognition is wrong. Workplace
Management. Retrieved February 16, 2004, from http://www.workforce.com.
[8] Puwanenthiren Pratheep kanth., Reward System And Its Impact On Employee Motivation In
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AUTHORS’ BIOGRAPHY:
Gangapuram Aruna, Assistant Professor, Dept. of MBA, Geethanjali College of Engineering and Technology,
Cheeryal Village, Keesara Mandal, Medchal District., Hyderabad, Telangana 501301

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